CONCORD — The state Department of Education could place city schools on a “conditional approval” list if the problems with overcrowding in the school system are not resolved, the deputy commissioner of education said Thursday.

But the state is working with Manchester school administrators on the way federal and state money is used in the district with an eye toward finding ways to pay for smaller classes.

State regulations also allow school districts to see approval for an “alternate method of compliance” with education standards. Class size limits are one area in which alternatives are allowed under the state regulations.

“I've been in touch with these people to see if they can assist us,” Superintendent Thomas J. Brennan said this week.

Deputy Education Commissioner Paul Leather said the state is monitoring the situation in Manchester and will try to help the city resolve the issues.

“We are working closely with the superintendent,” Leather said.

School districts must meet state-mandated educational requirements for approval. New Hampshire law requires that all children over the age of 6 attend an approved public or private school or a home school program approved by the DOE.

The requirements include limits on class sizes. The limits are currently 25 students per class in kindergarten through Grade 2, and 30 students per class for third grade through high schools.

The state education department monitoring of the situation knows no drop-dead date, such as the Oct. 1 deadline by which local districts must file census reports with the state detailing enrollment and class size.

“We follow very closely the size of classes and credits provided to students toward gradation,” Leather said.

Leather would not directly address the issue of whether the strings attached to some state and local funding programs can be cut. But the Board of School Committee recently approved spending $300,000 in federal funds on classroom teachers.

“Manchester is receiving money at this time from federal and state sources, we are looking at how those are used,” Leather said. “There are definitely ways in which it can be used; (it would be) based on a plan (Manchester) submits to us, they can recommend plans as long as they are within the guidelines.”

Brennan will meet with Leather and Education Commissioner Virginia Barry a week from today, the final business day before the Oct. 1 enrollment reports are due in to the state.

Without a resolution, either by hiring more teachers or through approval of alternatives, the state could eventually take action.

“If the schools are found to not be in compliance, we could look at their approval and may move to conditional approval status,” Leather said. “They would be on notice and would have to provide a plan for resolving the issues.”

The state allows a school district or school to hold conditional approval status for up to three years while a situation is addressed. If the situation not fixed in three years, the schools affected are considered not approved, and children are not considered to be attending an approved school as required by law.

“A team of folks are working with Manchester,” Leather said. “Some of it is financial and some of it is program support.”

Manchester's classroom crowding crisis was kicked off when the Board of Mayor and Aldermen stuck to the voter-approved property tax cap and set a limit for school spending lower than what school administrators claimed was needed to continue services at last year's levels.

Unions representing teachers and principals rejected concessions in their health insurance benefits similar to those accepted by other unions, which city officials claim would have reduced benefits costs to allow more teachers to be re-hired. The union took the position that it has no obligation to open and revise a contract with another year to run.

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Bill Smith may be reached at wsmith@unionleader.com.